Anger as Johnson leaves firms high and dry

Fresh restrictions on bars and restaurants pile pressure on sector as Bank of England Governor calls for furlough "rethink"

Furious business chiefs have stepped up calls for far-reaching taxpayer support as Boris Johnson unveiled a six-month Covid crackdown which could destroy thousands of companies.

Bosses and lobby groups said that further help is now essential to prevent an economic collapse after the Government called for office workers to stay at home and banned pubs and restaurants from opening after 10pm.

Kate Nicholls, boss of trade body UK Hospitality, said the change amounts to a “hospitality lockdown in all but name”.

The Treasury is understood to be considering further VAT and business rates deferrals, as well as a much more restricted furlough scheme including higher barriers to entry and possible clawback of funds. However, no decisions have been made and the clock is ticking.

Industry leaders begged for fresh support as Bank of England Governor Andrew Bailey called for a “rethink” on the furlough scheme, which is protecting more than 3m jobs but is due to end on October 31.

Mr Johnson said the Government will be “throwing its arms” around businesses and households, while the Treasury said Chancellor Rishi Sunak is “applying his imagination and creativity” to help the worst-hit sectors.

But the PM’s curfew on pubs and restaurants - tougher than in Germany and France - and tighter limits on gatherings to fight the virus were greeted with shock, with business leaders saying there was little consultation and that detail is severely lacking ahead of the rule change taking effect on Thursday.

Premier Inn owner Whitbread and pubs chain JD Wetherspoon became the latest to slash staff on Tuesday in a sign of the crisis facing the industry, announcing 6,500 job cuts between them.

A third of hospitality firms' annual sales happen between Halloween and New Year's Eve, meaning the restrictions could push many companies over the edge.

Ms Nicholls said: “To suggest that these measures could be in place for another six months without any hint of support for businesses directly affected was quite startling.

"Six months wipes out all of your Christmas trade.”

Josh Hardie, deputy director-general of the Confederation of British Industry, said: “If measures have to be put in place to stop a devastating second wave they’ve got to be done, but in order to protect jobs that needs to come hand in hand with clarity on business support. That is what will help businesses protect jobs.

“We’ve also got to make the six-month shutdown shorter and the best way of doing that is to turbo-charge testing. Let’s have a national challenge with business and government working together to improve capacity.”

Mr Bailey told a British Chambers of Commerce webinar that continued dependence on furlough in the hospitality, retail and entertainment industries most affected by social distancing means it is sensible to “stop and rethink”.

He said: “We are living in a fast-evolving world, certainly this week, so it would be completely inappropriate for me to tie the Chancellor’s hands. It is a very difficult situation we are in at the moment.

“What I would just reiterate is … the reason I said I think it was sensible not to continue the current scheme was precisely the point that we’ve moved from a world of generalised employment protection to rather more specifically focused areas.

“I think it is therefore sensible to stop and rethink the approach going forward, without any commitment to what that might be.”

Martin Beck, of Oxford Economics, said: “We think the furlough scheme is highly likely to be kept in place beyond the current October end-date, at least for affected sectors.

"Boosting the generosity of existing compensation schemes for firms affected by local lockdowns would be another option.”

Mr Beck warned that if the latest measures are not enough and the Government is forced to follow through on its threat of a a two-week "circuit breaker" lockdown to break Covid transmission, the economy could suffer a 2.5pc hit in the fourth quarter.

The pain faced by UK workers was underlined by payrolls firm XpertHR, whose wage settlement data showed the highest number of pay freezes across companies since the aftermath of the financial crisis in 2009.